No. of Recommendations: 3
Hi vsdi,

She told us we weren't approved through the auto underwriting because of our past bankruptcy 2 years ago. Is this normal?

Unfortunately yes, bankruptcies are becoming quite normal. Still, there are way to get financed even though you've gone through the BK.

We are applying for FHA. This is making us feel so on edge. We just want to know.

FHA loans sometimes have that effect on folks... though usually the seller, THEN the buyers. If you're applying through the builders and THEY are OK with FHA, then you're probably OK going that way as well.

The other question I have is about the interest rate she has on the paperwork she gave us. It says 7.375% interest rate but then there is also a place where it says the APR is 8.094%. I don't understand why the APR is so much higher. Is this the way all lenders are?

The APR is, for all real-world effects and purposes, meaningless. Few people understand it and even fewer know how to accurately calculate it... but it's required to be printed... so all these people who don't understand it keep putting numbers forward.

Theoretically the APR is the interest rate on your loan if all your non-recurring closing costs were actually interest, not costs. Problem is everyone tries to weasel a way to avoid adding various costs into the numbers... so using them to compare is worthless.

Is this the way all lenders are?

You mean confused and clueless about APRs? For the most part, yes.

Remember, the smaller your loan amount, the larger the closing costs in relation to the loan, thus the higher the APR will appear. The concept of APRs was a bureaucratic attempt to simplify something that simply isn't that simple.

Have an awesome weekend!
Dave Donhoff
Lic. Mortgage Broker
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